World Trade Impacts of Foot and Mouth Disease in Taiwan
Frank Fuller, Jacinto Fabiosa, and V. Premakumar
Briefing Paper 97-BP 16
April 1997
Center for Agricultural and Rural Development
Iowa State University
Ames, Iowa 50011-1070
www.card.iastate.edu
This material is based upon work supported by the Cooperative State Research Service, U.S.
Department of Agriculture, under Agreement No. 96-34149-2533. Any opinions, findings,
conclusions, or recommendations expressed in this publication are those of the authors and do
not necessarily reflect the view of the U.S. Department of Agriculture.
This paper is available online on the CARD Web site: www.card.iastate.edu. Permission is
granted to cite this information with appropriate attribution to the authors.
Questions or comments about the contents of this paper should be directed to Frank Fuller, 578
Heady Hall, Iowa State University, Ames, Iowa 50011-1070; Ph: (515) 294-2364; Fax: (515) 2946336; E-mail: ffuller@iastate.edu.
Iowa State University does not discriminate on the basis of race, color, age, religion, national origin, sexual orientation,
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CONTENTS
Executive Summary................................................................................ ................................... .....3
Introduction............................................................................................. ...................................... ..5
The FMD Outbreak in Taiwan....................................................................... ............................ .....5
Taiwan’s Livestock and Feed Industries............................................................. ............................ 6
Japan’s Pork Import Market and Price Stabilization Policy......................................................... .. 8
Scenario Assumptions................................................................................ ................................. ..10
Scenario Results....................................................................................... ................................... ..11
Scenario 1 Taiwan Does Not Reenter the Export Market........................... ........................... ..11
Scenario 2 Taiwan Reenters the Export Market in 2000........................... ............................. ..15
Summary................................................................................................ .................................... .. 17
Appendix A.......................................................................................... ....................................... ..19
References............................................................................................ .................................... .....26
TABLES
1. FMD-free countries as per Resolution no. XII of OIE................................. ...................... ........7
2. Use of feed ingredients by sector in Taiwan.................................................... ......................... 8
3. Markets share of major pork suppliers to Japan by product type.............................................. .9
4. Pork trade redistributions with no reentry of Taiwanese exports........................................ .....12
APPENDIX TABLES
A.1. Scenario 1 world pork trade impacts................................................................................ .....20
A.2. Scenario 1 U.S. pork sector results...................................................................................... ..21
A.3. Scenario 1 results for U.S. corn and soybean use, trade, and prices.................. ................. ..22
A.4. Scenario 2 pork trade redistribution......................................................... ............................ .23
A.5. Scenario 2 world pork trade impacts.................................................................................... .24
A.6. Scenario 2 U.S. pork sector results....................................................................................... .25
World Trade Impacts of Foot and Mouth Disease in Taiwan
EXECUTIVE SUMMARY
An outbreak of foot and mouth disease
(FMD) in Taiwan has prompted an indefinite
ban on pork exports from that country. This
will have a significant impact on pork trade
patterns and world pork prices. Taiwan has
accounted for over 15 percent of world pork
exports in recent years and is the predominant
exporter to Japan, the world’s largest pork
importer. This paper analyzes the price and
trade effects of this export ban. The study was
conducted using the FAPRI (Food and
Agricultural Policy Research Institute) modeling
system, a simulation model that enables
examination of the interaction among pork,
other meats, feed grains, and protein meal feeds.
The primary scenario analyzed assumes
that Taiwan will not reenter the pork export
market in the next 10 years. Japan, which
traditionally imports almost the entirety of
Taiwan’s exports, is likely to be extra cautious
to avoid any potential health risks to its large
domestic swine herd. The results of the analysis
indicate that the shortfall of 337 thousand metric
tons (tmt)—the remaining portion of the
baseline’s projected exports for Taiwan in
1997—in world export supplies will increase the
world price of pork by 5 percent in the first year.
In response to higher prices, other major
importers, in aggregate, will reduce imports by
70 tmt. Of this quantity, the decline in Japanese
imports is only 6 tmt, as the Japanese market is
buffered from world price fluctuations by their
gate price policy. Consequently, only 267 of the
337 tmt of pork removed from the market will
be supplied by the other pork exporting
countries. Because of its cost advantage and
available processing capacity, the United States
is projected to increase exports by 210 tmt,
capturing nearly 78 percent of the export
opportunities made available. Canadian exports,
limited by
processing capacity, grow by 37 tmt. The
increase from the EU is even more modest at
7 tmt because Denmark is the only country with
any significant exports to Japan. The present
swine fever problem in the Netherlands may
further affect export growth in the European
Union. Expansion in production capacity
induced by the price increase in 1997 leads to a
supply increase over the next several years,
dampening world prices, bringing them closer to
the baseline levels in later years.
As exporters and importers adjust to
these moderating prices, the United States
continues to increase and retain the major share
of the export opportunities arising from
Taiwan’s ban on pork exports. Lower pork
production in Taiwan reduces their import
demand for feed. However, grain prices weaken
only mildly because expanding pork production
in the United States increases domestic use.
An alternative scenario is also analyzed
under the assumption that Taiwan resumes
exports at 8 percent of the baseline level in the
year 2000, increasing to 53 percent of the
baseline by 2004. This additional supply, over
and above the increase due to adjustments
initiated in other exporting countries during the
previous 3 years, causes world prices to fall
marginally below the baseline levels in 2000,
2001, and 2002.
Exports from the United States are the
most affected by Taiwan’s reentry into the pork
export market. The United States reduces its
exports by 167 tmt in 2006 compared to the
previous scenario, while Taiwan increases its
exports to nearly 280 tmt. It is also argued that
the absence of Taiwan in the Japanese pork
market is likely to have a moderating influence
on the within-year trade fluctuations
experienced in the recent past due to the
Japanese gate price mechanism; however, no
attempt is made to quantify the possible
implications of reduced trade volatility.
Introduction
The recent ban on pork exports from
Taiwan resulting from an outbreak of foot and
mouth disease (FMD) in March 1997 will
significantly alter future world trade patterns in
pork, both in the short and long run. Despite
accounting for just over 1.0 percent of world
annual pork production, estimated at over 74
million metric tons (mmt), Taiwan has played a
major role in world trade because of its large
market share in Japan, the world’s single largest
pork importer. Japan was projected to import
904 thousand metric tons (tmt) of pork in 1997,
with 40.6 percent of Japan’s imports expected to
come from Taiwan. Since Taiwan is no longer
able to export pork, other major exporters will
be vying for Taiwan’s share of Japan’s pork
imports. In addition, as a major supplier in the
Japanese pork market, Taiwan has been an
important contributor in recent years to the
excessive volatility in trade patterns spawned by
Japan’s “snap-back” provision. Given the
significant nature of this event to world pork
markets, rigorous analysis is needed to gain a
better understanding of the magnitude of its
impact on world pork prices and its implications
for pork trade patterns.
The objective of this study is to provide
an in-depth analysis of the price and trade
effects created by the recent outbreak of FMD in
Taiwan. Specifically, we seek to answer the
following questions.
1. What will be the impact of Taiwan’s
exit from the pork export market on
U.S. pork and grain prices?
2. How will Taiwan’’s share of the
Japanese import market be divided
among the remaining pork exporters?
3. How will adjustments in world markets
affect countries not directly involved in
pork trade with Taiwan or Japan?
The analysis is performed using the Food and
Agricultural Policy Research Institute’s
(FAPRI) model of world agricultural production
and trade to simulate the removal of Taiwan’s
pork exports from world markets. The resulting
prices and trade flows are compared to FAPRI’s
1997 baseline projections (FAPRI 1997) to
ascertain the impact of this shock to the pork
sector on world prices and trade volumes. The
results are reported as follows. First, important
details of the outbreak of FMD in Taiwan are
presented, and the reactions by pork importing
nations are placed in context. Second, the
important characteristics of Taiwan’s livestock
sector are discussed, followed by a brief
description of Japan’s pork import market.
Third, specific modeling assumptions important
to the analysis are outlined, and the simulation
results for specific countries are discussed.
Finally, this report concludes with a brief
summary.
The FMD Outbreak in Taiwan
On March 14, 1997, the first case of
FMD in swine was reported in Hsinchu
Prefecture, in the northwest part of the island of
Taiwan. The Taiwan Health Research Institute
confirmed the diagnosis as an FMD case on
March 19, 1997. As of March 21, clinical cases
were observed in the western 10 prefectures, but
the full extent of the outbreak is still not certain.
While FMD does not pose a serious health
threat to pork consumers, this contagious viral
disease spreads by air, and an epidemic can be
disastrous to the entire swine industry of any
country.
Although effective vaccines are
available, vaccination is generally not cost
effective as a routine preventive measure. Also,
vaccination will not eradicate the disease. As
such, the effective countermeasure in case of an
outbreak is the “stamping-out” or slaughter of
infected herds and emergency vaccination of
herds predisposed to infection (Microsoft
Encarta 96, Encylopedia 1995). Along with the
adoption of a nationwide vaccination measure,
Taiwan announced an indefinite ban of pork
exports on March 21, 1997. Within the first few
weeks of the export ban, reportedly nearly
400,000 animals from over 1,000 infected farms
(of a total 250,000 farms) were destroyed, and
another 500,000 are expected to be slaughtered.
It is speculated that the required slaughter may
be as high as 1.6 million head of the total 10.5
million in the herd.
To avoid FMD infection of its domestic
swine herds, it is a common practice among
6 / FAPRI Staff
FMD-free countries to allow imports only from
other FMD-free countries. Table 1 provides a
list of countries declared free of FMD by the
World Organization of Animal Health (OIE), an
independent international organization founded
in 1924 to monitor and disseminate information
about animal diseases throughout the world.
Taiwan’s FMD-free status was suspended by
OIE due to the recent outbreak of the disease.
The country’s main export markets, namely,
Japan, Korea, and Singapore, followed suit by
imposing a ban on pork imports from Taiwan.
This action by countries that are FMD free is
consistent with the provisions of the World
Trade Organization’s “Agreement on the
Application of Sanitary and Phytosanitary
Measures,” which allows countries to adopt and
enforce measures necessary to protect human,
animal, or plant life or health.
1
Taiwan’s Livestock and Feed Industries
Agriculture contributes only 3.5 percent
to Taiwan’s total economic output (the service
sector contributes 60.2 percent and industry 36.3
percent). In the agricultural sector, the leading
commodities are pork and poultry, accounting
for 22 and 10 percent respectively of the value
of agricultural production. Pork production
alone comprises 63 percent of the value of
animal production. The country’s emphasis on
less land-intensive agricultural commodities is a
reflection of the land constraint faced in
Taiwan, a country where only 24 percent of the
3.6 million hectares of total land area is
cultivated due to the steep slope of its terrain.
Also, its proximity to high-income markets for
value-added livestock products in Japan, Hong
Kong, Korea, and Singapore is an advantage to
the livestock sector.
In Taiwan, the supply and demand
structure of livestock and poultry products
varies significantly. Beef is the lowest per
capita consumption at 3.16 kg. And beef is the
most import dependent of the three meats—
1
Data in this section were collected from The
Republic of China Yearbook 1996, Taiwan
Agricultural Yearbook 1996, and various attaché
reports on agriculture, livestock, and poultry.
beef, pork and poultry. Domestic beef
production constitutes only 8 percent (6 tmt) of
total supply (75 tmt) and the other 92 percent is
imported. Beef imports account for 2.64 percent
of total agricultural imports. The United States,
Australia, and New Zealand are the major
suppliers of beef to Taiwan. The beef import
market is very segmented based on product
differentiation. The United States captures 21.4
percent of Taiwan’s beef import market with
exports primarily composed of special quality
beef (SQB). Australia dominates the market for
shin, shank, and intercostal cuts, and New
Zealand leads in cheaper steak cuts. A
preferential tariff is granted to SQB. Poultry is
second in per capita consumption at a level of
30 kg, but the domestic industry, with
production of 655 tmt, can generally meet
domestic demand. Poultry meat imports are
insignificant primarily because of the ban
against chicken imports.
Pork, on the other hand, has the highest
per capita consumption level, 39.76 kg. and is
the only sector with substantial exports at 21
percent of Taiwan’s production. In 1995, there
were 26,153 hog farms and 55,317 persons
employed in pork production, retailing, meat
processing, and feed production. The 1996
beginning hog inventory is estimated at 10.5
million head (USDA), 14 percent of which are
breeding animals (Taiwan Agricultural
Yearbook 1996). In the same year, 14.6 million
head were slaughtered, implying a turnover rate
of 1.39. Pork exports account for 27.96 percent
of total agricultural exports. This amounted to
270 tmt (retail weight) valued at $1.58 billion.
Taiwan’s cost of production is very
competitive at $1,427 to $1,744 per mt
compared with the wholesale price of $1,390 in
the United States, $1,690 in Denmark, and
$4,848 in Japan. Of Taiwan’s total pork exports
in 1996,
Trade Impacts of Foot and Mouth Disease in Taiwan/ 7
Table 1. FMD-free countries as per Resolution no. XII of OIE
Australia
Czech Republic
Hungary
Malta
Slovakia
Austria
Denmark**
Iceland
Mexico
Belgium
Estonia
Indonesia
Netherlands
Slovenia
Bulgaria*
Finland
Ireland
New Caledonia
Spain
Canada**
France
Italy
New Zealand
Sweden
Chile
(Serbia and
Japan
Norway
Switzerland
Montenegro)*
Costa Rica
Germany
Korea
Poland
Taiwan*
Croatia
Greece
Lithuania
Portugal
United Kingdom
Cuba
Haiti
Luxembourg
Romania
United States**
Singapore
Uruguay
Cyprus
Honduras
Madagascar
* FMD–free status suspended due to recent occurrence.
** Major suppliers of pork to Japan.
SOURCE: OIE 1996a.
99.4 percent went to Japan, 0.39 percent to
Hong Kong, 0.19 percent to Korea, and a
negligible amount to Singapore. Taiwan also
imports both live hogs and pork, the former
coming from the United States, Finland, and
Ireland, primarily for breeding purposes.
Taiwan’s exports of live hogs for breeding
purposes generally go to Hong Kong, but it is
believed they are often subsequently shipped to
Mainland China.
Pork and poultry feed make up 47 and
45 percent, respectively, of the total and
commercial and farm processed feeds in
2
Taiwan. The other 8 percent is fed to cattle and
aquaculture. In 1995, total feed production was
8.87 million tons from 9.89 million tons of
ingredients. As shown in Table 2, the
composition of compound feeds consists of 28
2
Data in the following discussion were collected from
various USDA Foreign Agriculture Service attache
reports on oilseeds, products, and grain and feed
categories.
percent protein (2.79 million tons protein meal),
67 percent grain (6.60 million tons grains), and
5 percent starch, fats and oils, and other
ingredients (0.51 million tons).
The 6.2 mmt of corn consumed annually in
Taiwan is essentially used for feeds; moreover,
95.5 percent of the total corn supply is imported.
The United States holds a dominant 99 percent
share of the corn import market. Barley is a
substitute for corn in animal feeds, and the
quantity of barley fed would increase with
higher corn prices. Around two-thirds of the 0.3
million tons of barley Taiwan consumes
annually is used for feeds, the rest is for brewing
and food. Australia, Russia, and the United
States are
Taiwan’s primary barley suppliers. Taiwan
produces soymeal locally but imports close
8 / FAPRI Staff
Table 2. Use of feed ingredients by sector in Taiwan
Feed Ingredient
Livestock Sector
Swine
Poultry
Cattle
Aquaculture
Other
Total
(tmt)
Soybean Meal
886
811
36
52
19
1,804
Other Protein Meal
431
445
18
83
9
986
3,128
2,984
122
305
64
6,603
243
173
7
82
3
505
Total
4,685
4,413
183
* Others include starch, fat and oil, and other ingredients.
522
95
9,898
Grain (Corn/Barley)
Others*
SOURCE: USDA-FAS, TW 6045.
to 100 percent of the soybean raw material.
Only an additional 5 percent of total meal
requirement is imported. Canada, Thailand,
Vietnam, and the United States are suppliers of
soybeans, with the United States holding 99
percent of the market. This configuration in the
soybean complex is expected to remain in the
future since Taiwan has no duty on soybean
imports but a 3 percent duty on soymeal
imports.
Japan’s Pork Import Market and Price
3
Stabilization Policy
In the 1990s, the share of Japanese pork consumption
from imports doubled, reaching 33.72 (0.70 million
tons) percent compared to the 15.85 percent in the
1980s (0.28 million tons). Japan has four main
suppliers of pork, namely, the United States, Canada,
Taiwan, and Denmark. A breakdown of import
shares by country and product type is found in Table
3. In terms of total pork supply, Canada’s share has
remained in the 5-6 percent range. Denmark’s share
declined from 32 in 1992 to 18.21 percent in 1996,
while the shares of the United States and Taiwan
showed some gains at 21 and 38 percent,
respectively. Over time the share of fresh and chilled
pork imported by Japan has increased from 24
percent in 1992 to 31 percent in 1995. The 1996
decline in fresh and chilled imports to 26 percent may
be a result of the safeguard provision that promotes
excess imports of frozen pork in the first quarter of
the Japanese fiscal year (i.e., April–June) in
4
anticipation of a higher gate price . In the fresh and
chilled pork import category, only the United States
has substantially gained market share, increasing from
29 percent in 1992 to 42 percent in 1996. Taiwan’s
share has declined from 68 percent to 44 percent over
the same period, while Denmark is not a big supplier
in frozen pork imports. In the past five years,
Taiwan’s share of frozen pork imports increased
initially then declined to a share of 36 percent, while
Denmark’s share declined from 42 to 24 percent.
Japan has a price stabilization policy on
beef and pork products that is supported by
selective border protection measures. In the
3
Data for this section were collected from USDA
Foreign Agriculture Service attache reports on
livestock and the LIPC Monthly Statistics.
4
The gate-price mechanism is described in more
detail on the following pages.
Trade Impacts of Foot and Mouth Disease in Taiwan/ 9
Table 3. Market share of major pork suppliers to Japan by product type
Product/Year
Exporting Country
US
Canada
Taiwan
Denmark
Other
Total
Percent
Chilled
1992
29.33
0.98
68.37
0.02
1.30
100
1993
36.54
1.57
60.32
0.11
1.46
100
1994
38.09
2.55
57.25
0.40
1.71
100
1995
47.27
2.96
47.69
0.09
1.99
100
1996
42.12
4.25
44.42
0.04
9.18
100
1992
9.51
7.12
35.85
42.10
5.42
100
1993
7.05
8.14
38.83
39.88
6.10
100
1994
5.94
6.69
44.34
36.65
6.38
100
1995
8.34
6.35
45.97
29.38
9.96
100
1996
13.19
6.57
35.69
24.42
20.14
100
1992
14.33
5.63
43.77
31.86
4.42
100
1993
14.95
6.38
44.58
29.24
4.86
100
1994
14.96
5.53
47.96
26.48
5.07
100
1995
20.33
5.30
46.50
20.36
7.51
100
1996
20.55
5.98
37.91
18.21
17.35
100
Frozen
Total
SOURCE: LIPC Livestock Monthly Statistics
Note: Shares based on Japanese fiscal year (April-March), with 1996 data from April 1995 to
February 1997 only.
case of pork, a gate price is used as a minimum
import price for each import shipment entering
Japan, allowing for a composite valuing of
combined low- and high-priced cuts. It is a
negotiated minimum import price, and the
standard import price is computed as the sum of
gate price and an ad valorem duty. Thus, with
world price levels lower than the gate price,
Japanese domestic production and consumption
are substantially buffered from fluctuations in
world price.
Moreover, under a Safe Guard (SG)
measure termed the “snap-back” provision,
when the total imports in each cumulative
quarter within a fiscal year exceeds 119 percent
(the “trigger” level) of the corresponding period
average of the previous three years, the gate
price is automatically raised 24 percent to
discourage rapid imports. The gate price is held
at that level until the beginning of the next fiscal
year. Additionally, Special Safe Guard (SSG)
measures provide for similar but smaller
increases in the standard import price through
the ad valorem duty without affecting the gate
price. The gate price was raised to ¥709.67/kg.
on July 1, 1997. In view of the likely shortfall
in supply resulting from the market, alternative
10 / FAPRI Staff
measures including reversal of the extension are
to be considered.
This two-step price mechanism in one
of the primary import markets for pork has had a
jarring effect on world trade, especially in
frozen pork (USDA, Livestock & Poultry,
1996). Typically, the first quarter of the
Japanese fiscal year sees an annually high level
of imports included to beat the onset of the
trigger; but this, in fact, hastens the trigger. The
flood of pork imports is followed by an
extended lull in trade due to the high barrier.
Import suppliers stockpile pork, preparing to
compete for market share as soon as the gate
price falls but before the snap-back provision is
triggered once again. This cycle effectively
reduces the active trading period, collapsing it
into a few months within the year and thereby
increasing storage costs at both ends of the
marketing chain.
As the predominant exporter to Japan,
and possibly due to direct investment interests
of Japanese establishments in Taiwan in both
feed and livestock industries, Taiwan has had a
significant role in accelerating this within-year
volatility in trade. Hence, the withdrawal of
Taiwan from the Japanese pork market is also
expected to smoothen the within-year trade by
making the triggering process an exception
rather than the rule, as it probably was meant to
be. With Taiwan, the largest supplier to Japan,
out of the market the likelihood and thus the
threat of the disruptive trigger is substantially
reduced. Reductions in the frequency and
duration of the higher gate price imply a lower
average annual import price, which would
contribute to increased consumption and
increases in both the volume and share of
Japanese imported pork.
The expected consequences of the
Taiwanese pork export ban can thus be
described as follows. The abrupt supply
reduction in the world market will exert upward
pressure on world pork prices. Because Japan
is, to a large extent, insulated from world price
movements, import demand in Japan is not
expected to decline significantly. Thus, the
trade share lost by Taiwan is transferred to other
major suppliers, and their export supply
response affects other importers as well. In
addition, the reduced competition in exports to
Japan eases the threat of turning on the snapback provision, thus smoothing the quarterly
trade pattern. This effectively lowers annual
average Japanese import price by reducing both
the frequency and duration of the higher gate
price. The lower import price in Japan will
promote consumption, dampen production, and
thereby add to import demand. The present
analysis, however, focuses only on the
redistribution of the share of exports lost by
Taiwan and the consequent and simultaneous
changes in prices and quantities of pork and
feed consumed, produced, and traded
worldwide.
Scenario Assumptions
Perhaps the most critical assumptions
for this analysis are the duration of the export
ban and the likelihood of Taiwan’s reentry into
the Japanese pork market. At this point it is
uncertain how long the export ban will last;
nevertheless, according to the International
Animal Health Code (Part 2, Sec. 2.1, Article
2.1.1.2), a country is required to send a
declaration to OIE stating that there has been no
outbreak of FMD within the previous two years
and must demonstrate the absence of viral
activity to be listed as FMD-free with
vaccination. If listing as an FMD country
without vaccination is desired, an additional
12-month waiting period with no vaccination is
required. These are the minimum requirements
to be certified as FMD-free.
Although Taiwan may begin exporting
to other countries that are not FMD-free before
it is declared FMD-free, it may not export to
Japan. Taiwan’s reentry into the Japanese
market is further complicated by Japan’s
anticipated declaration of a swine fever free
country in 1999. Moreover, Taiwan must strive
to become hog cholera free to enter into other
import markets and to regain access to the
import market in Japan. Thus in addition to
combating FMD, Taiwan has embarked on a
three-year Swine Fever Eradication Plan that
started July 1996 and is expected to last until
June 1999.
The severity of the problem in Taiwan
makes any claims for resumption of Taiwanese
Trade Impacts of Foot and Mouth Disease in Taiwan/ 11
exports to Japan within three years appear
optimistic. Japan, which currently is the sole
importer of any significant quantities of pork
from Taiwan, is not likely to look favorably
upon imports from Taiwan given the perceived
threat to Japan’s inventory of 10 million hogs.
Moreover, there is the possibility of consumer
overreaction to FMD in the wake of last year’s
BSE and E-Coli scares.
Japan will likely remain extremely
cautious with respect to pork imports from
Taiwan. It is questionable whether Taiwan will
be able to find alternative export markets. Of the
other major pork consumers in the region, both
the Philippines and South Korea will be
cautious about exposing their animal inventories
to possible large-scale FMD infection. While
FMD may be a negligible consideration in Hong
Kong, which imports nearly all of its domestic
pork requirement, future import policies set by
China are likely to hinder rather than favor
increased imports from Taiwan. In light of these
arguments, the primary scenario analyzed
incorporates the assumption that Taiwan will
not export any pork in the next ten years. In
comparison, the last FAPRI baseline projected
Taiwan’s net exports would stay stable at nearly
350 tmt, varying very marginally with world
price changes. An alternative scenario allowing
for limited recovery in Taiwanese exports after
three years is also analyzed, providing some
measure of the sensitivity of the results to the
export assumption. Brief comments on this will
follow the main impact analysis based on the
zero-export assumption presented in the section
on scenario results
Scenario Results
Scenario 1: Taiwan Does Not Reenter the
Export Market
Taiwan’s pork exports during the first
two months of this year, before the ban came
into effect, are estimated at 30 tmt. An
additional 13 tmt slaughtered before February
20, 1997, is reportedly available for shipping to
Japan, but to avoid infection of domestic herds
and losing further consumer confidence in
Japan, this meat will most likely be destroyed.
As shown in Table 4, it is assumed that Taiwan
does not export any more than the 30 tmt of
pork already shipped in 1997. Also, the export
levels in the rest of the projection period remain
at zero. Thus, at the baseline prices, there will
be an import demand surplus of 337 tmt
(Taiwan’s baseline exports of 367 tmt less 30
tmt already exported in 1997). The import
demand surplus for the rest of the period at
baseline prices will equal Taiwan’s projected
baseline export levels, since Taiwan’s exports
are constrained to zero in the current scenario.
Taiwan’s exit from the pork export
market creates a supply vacuum in world pork
trade, exerting upward pressure on world pork
prices as the world export supply falls short of
demand. Exporters and importers respond to the
new prices. Japan, however, is largely insulated
from world price changes by the gate-price
mechanism; thus, the import demand of this
single largest pork importer remains largely
unaffected. The bulk of the resulting supply
shortage is filled by U.S. exports. Figure 1
displays the scenario and baseline paths for pork
exports. Relative to the baseline, the United
States exports an additional 210 tmt of pork in
1997, accounting for nearly 57 percent of
Taiwan’s baseline exports for that year.
U.S. pork exports are projected to
continue to grow relative to the baseline until
2001. In the long run, the United States will
gain just over 300 tmt of additional pork export
sales annually, representing an average annual
increase of 26 percent. Higher pork export
levels, however, do not equate one-to-one into
higher pork production. In 1997 and 1998,
respectively, only 5 percent and 28 percent of
12 / FAPRI Staff
Table 4. Pork trade redistribution with no re-entry of Taiwanese exports
Year
1997
1998
1999
2000
Change from Baseline
Change as percent
2002
2003
2004
2005
2006
(dollars per mt)
U.S. Barrows and Gilts Price
Scenario
2001
1,249
1,071
944
1,001
1,085
1,029
962
1,046
1,125
1,041
62
49
17
-1
4
13
18
19
19
18
5.2%
4.8%
1.8%
-0.1%
0.4%
1.3%
1.9%
1.8%
1.7%
1.8%
(tmt)
337
360
348
347
354
355
349
349
357
357
1,791
1,910
2,031
2,126
2,218
2,345
2,459
2,471
2,480
2,571
-70
-57
-35
-16
-12
-15
-22
-25
-27
-31
-3.9%
-3.0%
-1.7%
-0.8%
-0.5%
-0.7%
-0.9%
-1.0%
-1.1%
-1.2%
6
7
4
1
2
3
4
3
3
3
Mexico
19
16
16
14
9
5
6
8
10
10
Others
45
34
15
0
1
8
13
14
15
18
T otal
70
57
35
16
12
15
22
25
27
31
267
303
313
331
343
340
327
325
329
326
79%
84%
90%
95%
97%
96%
94%
93%
92%
91%
210
252
293
325
335
324
310
304
308
306
7
8
4
0
1
2
4
3
3
3
37
30
14
5
6
9
11
12
13
13
78%
83%
93%
98%
98%
95%
95%
94%
93%
94%
Loss in Exports by Taiwan
World Imports
Scenario
Change from Baseline
Change as percent
Import re ductions from
Japan
Added Export O pportunities
As percent of export reduction in
T aiwan
United States
European Union (15)
Canada
U.S. Share
Trade Impacts of Foot and Mouth Disease in Taiwan/ 13
Thousand Metric Tons
1500
1000
500
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Year
Canada Baseline
EU Baseline
US Baseline
Canada Scenario
EU Scenario
US Scenario
Figure 1. Baseline and scenario export levels
60
Dollars/Hundredweight
55
50
45
40
1997
1998
1999
2000
2001
2002
Year
Baseline
Figure 2. U.S. barrow and gilt prices
Scenario 1
2003
2004
2005
2006
14 / FAPRI Staff
the additional pork exports are supplied by
production increases; the remainder come from
a decline in U.S. consumption. In the longer
term additional U.S. pork bound for world
markets is the result of greater pork production.
Increasing U.S. pork exports by an
average of 36 percent of the baseline in the next
five years will raise hog prices roughly 5
percent in 1997 and 1998; however, once
additional hog inventories are built, pressure on
prices drops significantly. Figure 2 shows the
path of U.S. hog prices over the projection
period. U.S. barrow and gilt prices average 1.7
percent higher than the FAPRI baseline price
projections in 1999 and beyond. Higher hog
prices are passed on to U.S. consumers, causing
domestic pork consumption to drop an average
of 1.8 percent (see Table A.2 in the Appendix).
Slightly higher pork prices also send small
ripples through other U.S. meat markets,
increasing domestic demand for beef and
poultry, but long-run price and quantity changes
are generally less than 0.3 percent.
The abrupt cessation in Taiwan’s pork
exports to Japan is naturally expected to affect
the Japanese market most directly and
significantly. However, the price insulation
mechanism in Japan transfers nearly the entire
impact to more price responsive traders, both
exporters and importers. The gate-price
mechanism is effective only when external price
is below the gate price. Even at the lower gate
price of ¥560/kg, the price far exceeds the
comparable U.S. price. On the other hand, it is
evident that despite the higher barrier at ¥695/kg
during the snap-back, there are continued
imports, albeit at a much subdued level, and
most likely in specific, higher–quality cuts.
Therefore, it is likely that a small segment of the
import market exists that is not insulated by the
gate price, being at a level higher than the gate
price, especially when the snap-back is off.
This price–sensitive segment of import demand
responds to the 5 percent increase in world pork
price by reducing consumption a mere 0.2
percent. Domestic production, meanwhile, is
insulated by the gate-price mechanism and
remains virtually unchanged. The result is a 6
tmt reduction in Japanese pork imports in 1997,
amounting to a 0.6 percent decline from the 904
tmt projected in the baseline.
The effects on substitute meat products
are also minimal. As pork per capita
consumption decreases from 17.14 to 17.10 kg,
consumption of domestic beef (Wagyu and dairy
beef) increases marginally. However,
consumption of imported beef falls from 7.50 to
7.45 kg as a result of the 2 percent world price
increase, resulting in a negligible decline in total
beef consumption. Even these minor deviations
from the baseline decline rapidly as world prices
tend toward the baseline prices in the long run.
Other pork exporting countries also will
see an increase in the demand for their products,
particularly over the next three years while the
United States is building extra production
capacity. Figure 3 displays export levels for
United States, Canada, and the European Union.
Canada is one of the few countries able to
export pork to Japan, and it will experience the
second largest growth in exports. Unlike the
United States, however, Canadian export
potential is limited by meat-packing capacity in
the short run. Nevertheless, Canada is projected
to gain an additional 37 tmt in 1997, amounting
to a 12.5 percent increase over the baseline
level. Canada’s pork shipments grow 9.7 and
4.5 percent in 1997 and 1998, respectively, but
Canadian pork exports will be up only an
average of 3 percent relative to the baseline for
the remaining years as world prices stabilize.
The EU, and Denmark in particular, is also a
significant force in the Japanese pork market
and should see some increase (roughly 1.3
percent in 1997 and 1998) in their pork
shipments to Japan. Danish pork production
costs are higher than in the United States;
consequently, their exports are not price
competitive. Further, the recent incidence of
swine fever could affect the expansion of the
EU’s exports.
Just as the higher U.S. prices dampen
domestic consumption of pork, importing
countries also experience a decline in the
quantity of imported pork products. Mexico,
South Korea, the former Soviet Union (FSU),
and other smaller countries in the rest of the
Trade Impacts of Foot and Mouth Disease in Taiwan/ 15
5
world (ROW) significantly decrease their
imports of pork relative to the baseline
projections. Of the net importers, Mexico is the
most responsive to U.S. prices, both in
production and in consumption. In response to
the 5 percent price increase in 1997, Mexican
pork consumption falls by 21 tmt (a 2.2 percent
decline). The higher prices also promote hog
inventory buildup in Mexico, leading to a
marginal loss of 2 tmt in production in 1997 but
increasing productive capacity for the future.
The net result is a 19 tmt reduction in imports
from the 73 tmt projected in the baseline for
1997. The other major import reduction by any
single country is the 18.4 tmt reduction in the
FSU. This 3 percent reduction in imports
results from a mere 0.5 percent decline in
consumption. The ROW reduces imports by 20,
13, and 10 percent respectively, in the first three
years of the projection period. In 1997 this
amounts to a 21 tmt decline in pork imports.
The short-run impact on net importing
countries is large because total world pork
production cannot be rapidly increased without
creating lasting impacts on future productive
capacity. Once inventories in the United States
and other exporting countries are allowed to
adjust to the changes introduced by Taiwan’s
departure from world pork trade, pork prices
and import demand levels move closer to the
baseline projections. After 1999, Mexico and
ROW imports decline an average of 3.7 and 7.2
percent, respectively.
The import reductions mentioned here
together with smaller reductions from other net
importers, amount to a 70 tmt reduction in world
imports, as world prices rise by 5 percent. Thus
of the original 337 tmt of pork removed from the
market following Taiwan’s imposition of a pork
export ban in 1997, 70 tmt is lost due to the
price increase, leaving the remaining exporters
only 267 tmt of additional export opportunities.
Among these exporters, the United States is
projected to capture 78 percent of the additional
export demand faced by these countries in 1997.
5
FAPRI Staff Report #2-97, FAPRI 1997 World
Agricultural Outlook, provides a list of the countries
included in the ROW.
A breakdown of Taiwan’s baseline exports is
shown in Figure 3.
Greater pork production in the United
States and declining pork production in Taiwan
will have a small net impact on U.S. corn and
soybean markets. Domestic corn consumption
increases an average of 762 tmt relative to
baseline projections, less than a 0.5 percent
change. At the same time, corn exports decline
an average of 965 tmt, causing the U.S. Gulf of
Mexico price to fall roughly $.67 per mt below
the baseline price. In 1997 the corn price at
Gulf ports is $1.65 below the baseline
projection of $122.61/mt Similar changes occur
in the U.S. soybean market. Soybean crush is
up an average of 134.6 tmt annually relative to
the baseline, but soybean exports are down 198
tmt. The U.S. soybean price at the Gulf is
projected to average $1.66 per mt below the
baseline, with declines closer to $2.00/mt in
1997 and 1998. The impact on grain prices is
the greatest in the first two years of the
projection period because foreign import
demand for feed drops off more rapidly than
U.S. hog production is able to increase.
Scenario 2: Taiwan Reenters the Export
Market In 2000
The results from Scenario 1 are
conditioned upon the assumption that Taiwan’s
pork export industry is unable to recover from
the damage caused by the outbreak of FMD.
While a plausible assumption, given the
difficulties the country faces in reentering the
export market, it is possible Taiwan could
resume exporting some pork in as little as three
years. To measure the impact of such a
recovery on meat trade and prices, a second
simulation was performed under the assumption
that Taiwan would gradually reenter the pork
export market in the year 2000.
16 / FAPRI Staff
400
T housand metric tons
300
200
100
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Year
Baseline T aiwan Exports
Added exports by US
Added exports by others
Import reductions
Figure 3. The impact of Taiwan’s ban on pork exports
In this scenario, Taiwan begins
exporting at roughly 8 percent of its baseline
level in 2000, expanding to just under 53
percent by 2004. In 2000, Taiwan ships 28 tmt
of pork, displacing 17 tmt from the United
States, 3 tmt from Canada, and 1 tmt each from
China, Eastern Europe, and the European Union.
The remaining 5 tmt represent increases in
imports relative to scenario 1 due to slightly
lower U.S. hog prices. A similar shifting of
trade patterns occurs in the following years as
Taiwan reclaims a portion of its market share
lost as a result of the FMD outbreak. By the end
of the scenario, the United States exports 136
tmt of pork more than in the baseline but 173
tmt less than the level in Scenario 1. The
majority of Taiwan’s exports in 2006, 92.5
percent, represent lost market share on the part
of the United States relative to Scenario 1.
Other exporting countries also react to
Taiwan’s reentry and its impact on U.S. hog
prices. Canadian pork exports fall below the
baseline levels in 2001, 2002, and 2003 because
the U.S. price falls in response to increased
world pork supply. Likewise, EU exports fall
less than 1 percent below their baseline levels in
2000, 2001, and 2002. Both countries’ exports
recover as U.S. hog prices rise, but neither
reaches the levels achieved in Scenario 1. Net
importing countries show stronger demand for
pork imports relative to Scenario 1. Some
countries post positive import changes relative
to the baseline in years when U.S. pork prices
dip below baseline levels. For example, in 2002
when the U.S. barrow and gilt price is below the
baseline price, the FSU imports 15 tmt, Mexico
imports 3 tmt, and Japan imports 1 tmt more
than in the baseline. Total imports in these
countries are, respectively, 13, 8, and 4 tmt
above the quantities in Scenario 1. Of the
importing countries significantly impacted in
Trade Impacts of Foot and Mouth Disease in Taiwan/ 17
Scenario 1, ROW shows the weakest import
demand recovery in Scenario 2.
The weakening of U.S. pork export
demand impacts domestic production,
consumption, and prices. A higher hog price
relative to the baseline in the latter years of the
1990s prompts swine producers to build
inventories and production capacity in the
expectation of continued strong export demand.
When Taiwan reenters the export market in
2000, producers slaughter greater numbers of
hogs from the breeding herd, but the previous
years of hog inventory buildup do not allow
production to decline as rapidly as export
demand. The result is that hog prices fall below
the baseline levels in 2000, 2001, and 2002,
while productive capacity adjusts to the new
export climate. Once production has stabilized,
output is only 0.7 percent above the baseline
level. The lower hog price works up the chain
to consumers, prompting domestic consumption
to rise an average of 62 tmt above levels in
Scenario 1. Domestic pork consumption still
remains just under 1 percent lower than the
baseline quantity.
Summary
Taiwan has been a major player in
world pork trade for more than a decade, and it
holds a particularly significant place in the
important Japanese import market. The recent
outbreak of FMD in Taiwan, causing them to
ban pork exports, is certain to a have a
substantial impact on world pork trade. This
paper seeks to increase our understanding of the
magnitude and direction of the changes that will
occur in meat and feed grain prices and trade
volumes by simulating world agricultural trade
using FAPRI’s world agricultural trade model.
Two scenarios were run employing different
assumptions regarding Taiwan’s ability to
reenter the pork export market.
Under the assumption that Taiwan does
not resume exporting pork in the next 10 years,
the simulation indicates that the United States
will capture roughly 80 percent of the export
opportunities projected for 1997 and 1998.
Canada, China, and the European Union are also
able to increase their exports over the baseline
levels. Greater demand for U.S. pork exports
drives up the U.S. barrow and gilt price by 5
percent in 1997 and 1998 and by a lesser
amount for the majority of the projection period.
A higher hog price dampens the quantity
demanded in both domestic and import pork
markets, taking some pressure off world markets
to completely replace Taiwan’s exports. In
1997, pork imports by the FSU, Mexico, South
Korea, Japan, and the rest of the world decline
significantly, lowering total pork trade by 70
tmt. As productive capacity in exporting
countries increases, world prices come closer to
the baseline levels, and the reduction in world
pork trade relative to the baseline narrows to 31
tmt.
If we assume Taiwan is able to begin
exporting gradually beginning in 2000, the longrun gain in U.S. market share is significantly
lower than under the previous assumption.
Other exporters also lose some of the market
share gained in the later 1990s, as Taiwan
recaptures 53 percent of its baseline exports.
The U.S. barrow and gilt price falls below the
baseline level for the first three years of the next
century, as export demand weakens and the U.S.
hog sector eliminates additional productive
capacity built up in response to Taiwan’s exit
from the export market in 1997. Once hog
inventories have adjusted, the U.S. hog price
climbs above the baseline level, ending the
period a little over 1 percent higher than
previous projections. Generally lower world
pork prices after 2000 relative to Scenario 1
leadsto greater world pork imports, even
exceeding baseline levels in 2001, 2002, and
2003.
In conclusion, a cautionary note on the
interpretations of these additional volumes and
shares is in order. The nature of net trade
models with no specific reference to sourcedestination relationships can obscure both
interpretation of these share changes and any
inferences drawn from them. For example, the
210 tmt additional exports from the United
States to meet the 267 tmt of export
opportunities in Scenario 1 does not suggest that
the United States will capture 78 percent of the
Japanese market opened up by Taiwan’s export
ban. First, Japanese imports declined by only 6
tmt, and thus the additional opportunities in
18 / FAPRI Staff
Japan are 331 tmt: 64 tmt export opportunities
were closed in the rest of the world in response
to higher world prices. Second, the added 210
tmt from the United States may not all go to the
Japanese market. For instance, given the
Japanese preference for some Danish pork
products, it is possible more frozen Danish
products may be diverted from other export
markets to Japan. Thus, the
7 mmt added net exports for the European
Union may understate the actual additional
exports to Japan from Denmark. The United
States may export to countries other than Japan
to partially offset the supply reductions in those
countries. Similarly, the expanding South
Korean export sector may supply a much larger
volume to Japan than 3 tmt of premium pork by
diverting product from its domestic market and
satisfying domestic demand through less
expensive imports from the United States.
With these cautions in mind, the
conclusion of this study is that the pork industry
in the United States, more than in any other pork
exporting nation, has much to gain from the
recent turn of events in Taiwan. Moreover, the
removal of Taiwanese pork from the Japanese
market will not substantially impact pork
consumption levels in Japan; however,
significant adjustments will occur in the market
shares of nations exporting pork to Japan.
Modest increases in the world pork price will
cause other pork importing countries to reduce
their import quantities, facilitating world market
clearing until greater pork production is
generated.
Trade Impacts of Foot and Mouth Disease in Taiwan/ 19
APPENDIX A.
Impacts and Results for Scenario 1 and Senario 2
Trade Impacts of Foot and Mouth Disease in Taiwan/ 21
Table A.1. Scenario 1 world pork trade impacts
Year
1997
1998
1999
2000
2001
(tmt)
2002
2003
2004
2005
2006
Canada
China
Eastern Europe
331
256
106
341
229
105
322
206
76
340
206
65
375
207
78
338
195
87
300
184
82
345
187
87
384
190
105
383
177
113
European Union
T aiwan
590
30
564
0
532
0
531
0
555
0
558
0
559
0
584
0
608
0
609
0
Net Exports
United States
T otal Net Exports
Net Imports
Former Soviet Union
Hong Kong
Japan
Mexico
Other Western Europe
South Korea
Rest of World
T otal Net Imports
U.S. Barrow and Gilt Price
478
672
894
984
1,003
1,167
1,334
1,268
1,194
1,288
1,791
1,910
2,031
2,126
2,218
2,345
2,459
2,471
2,480
2,571
523
556
564
544
516
549
595
578
560
565
173
898
73
186
920
104
197
952
137
200
1,012
175
201
1,104
200
208
1,148
231
216
1,164
247
218
1,182
243
219
1,199
252
228
1,221
279
12
25
86
14
47
82
16
67
98
18
72
106
20
77
100
22
91
96
24
109
104
26
115
109
28
120
102
30
146
101
1,791
1,910
2,031
2,126
2,218
2,345
2,459
2,471
2,480
2,571
(dollars per mt)
1,001
1,085
1,029
962
1,046
1,125
1,041
1,249
1,071
944
Change from Baseline
(tmt)
Net Exports
Canada
China
37
8
30
6
14
-2
5
0
6
4
9
7
11
4
12
5
13
5
13
3
6
7
-337
8
8
-360
5
4
-348
-0
0
-347
-3
1
-354
-2
2
-355
-1
4
-349
0
3
-349
0
3
-357
0
3
-357
United States
210
252
293
325
335
324
310
304
308
306
T otal Net Exports
-70
-57
-35
-16
-12
-15
-22
-25
-27
-31
Net Imports
Former Soviet Union
-19
-15
-1
8
7
3
0
-0
-1
-1
Hong Kong
Japan
Mexico
-3
-6
-19
-2
-7
-16
-1
-4
-16
0
-1
-14
-0
-2
-9
-1
-3
-5
-1
-4
-6
-1
-3
-8
-1
-3
-10
-1
-3
-10
Other Western Europe
South Korea
Rest of World
0
-3
-21
0
-4
-13
0
-2
-11
0
-1
-8
0
-1
-7
0
-3
-7
0
-4
-8
0
-4
-8
0
-4
-9
0
-8
-9
T otal Net Imports
-70
-57
-35
-16
-12
-15
-22
-25
-27
-31
Eastern Europe
European Union
T aiwan
22 / FAPRI Staff
Table A.2. Scenario 1 U.S. pork sector results
Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
(m illion head)
In ve n tori e s
Market Hogs
P ercent Change
from Baseline
49.8
0.4%
50.7
1.4%
50.7
2.3%
51.0
2.5%
52.3
2.2%
52.7
1.9%
53.0
1.8%
54.6
1.7%
56.1
1.6%
56.7
1.6%
Breeding Herd
P ercent Change
from Baseline
6.94
0.9%
7.13
2.1%
7.17
2.6%
7.07
2.3%
7.01
2.0%
7.12
1.8%
7.11
1.7%
6.94
1.7%
6.95
1.7%
6.93
1.7%
(t m t )
S u ppl y an d De m an d
P roduct ion
P ercent Change
7,937
0.1%
8,462
0.8%
8,962
1.7%
9,057
2.3%
9,076
2.2%
9,372
1.9%
9,655
1.7%
9,531
1.7%
9,486
1.7%
9,785
1.7%
7,449
-2.5%
7,773
-2.3%
8,064
-1.7%
8,091
-1.5%
8,079
-1.6%
8,192
-1.7%
8,317
-1.7 %
8,278
-1.7%
8,291
-1.8%
8,482
-1.7%
753
38.6%
933
37.0%
1144
34.4%
1222
36.2%
1241
36 .9%
1406
30.0%
1573
24.5%
1506
25.3%
1432
27.3%
1527
25.1%
56.63
48.56
42.80
45.39
49.21
46.69
43.64
47.44
51.03
47.22
P ercent Change
from Baseline
5.3%
4.8%
1.8%
-0.1%
0.4%
1.3%
1.9%
1.8%
1.7%
1.8%
P ork Ret ail
2.34
2.31
2.27
( do llars per lb)
2.37
2.49
2.49
2.47
2.58
2.66
2.65
P ercent Change
from Baseline
5.0%
4.9%
3.7%
3.1%
3.3%
3.7%
3.9%
3.7%
3.7%
3.8%
16.50
20.5%
10.89
25.2%
5.50
17.6%
( dollars per cwt )
7.22
9.95
1.5%
3.1%
6.78
11.4%
3.48
33.1%
6.28
17.2%
8.78
11.9%
4.73
24.9%
from Baseline
Dom est ic Use
P ercent Change
from Baseline
Export s
P ercent Change
from Baseline
(do llars per cwt )
Pri ce s
Barrows and Gilt s
Ne t Re tu rn s
Farrow - Finish
P ercent Change
from Baseline
Trade Impacts of Foot and Mouth Disease in Taiwan/ 23
Table A.3 Scenario 1 results for U.S. corn and soybean use, trade, and prices
Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
132.6
0.6%
133.9
0.3%
135.1
0.5%
137.9
0.5%
(mmt)
139.9
140.6
0.5%
0.6%
142.0
0.6%
143.6
0.6%
144.8
0.6%
147.7
0.6%
46.8
52.1
59.6
63.4
65.0
67.9
70.3
72.2
75.1
76.1
-2.9%
-1.6%
-1.3%
-1.4%
-1.4%
-1.3%
-1.3%
-1.3%
-1.3%
-1.3%
38.1
38.4
39.3
40.0
40.8
41.5
42.1
42.7
43.4
44.0
Percent Change
from Baseline
0.3%
0.1%
0.3%
0.3%
0.4%
0.4%
0.4%
0.4%
0.4%
0.5%
Exports
24.1
24.0
23.8
23.9
24.0
24.2
24.4
24.6
24.9
25.4
-0.9%
-0.2%
-0.6%
-0.7%
-0.9%
-1.0%
-1.0%
-1.1%
-1.1%
-1.1%
120.96
106.77
106.26
108.74
(dollars per mt)
109.96 114.37
116.96
119.17
123.42
126.19
-1.3%
-0.6%
-0.4%
-0.5%
-0.5%
-0.5%
-0.5%
-0.5%
-0.6%
-0.4%
268.33
244.70
230.42
229.07
233.58
235.66
239.54
243.18
247.97
256.04
-0.7%
-0.8%
-0.5%
-0.7%
-0.7%
-0.7%
-0.6%
-0.7%
-0.7%
-0.6%
Corn
Domestic Feed Use
Percent Change
from Baseline
Exports
Percent Change
from Baseline
Soybe ans
Domestic Crush
Percent Change
from Baseline
Price s
Corn Gulf Price
Percent Change
from Baseline
Soybean Gulf Price
Percent Change
from Baseline
24 / FAPRI Staff
Table A.4. Scenario 2 pork trade redistribution
YYear
2000
2001
2002
994
-7
-0.7%
1,064
-17
-1.5%
1,004
-12
-1.2%
943
2
0.2%
1,016
11
1.0%
1,092
14
1.2%
1,011
12
1.2%
319
249
186
(tmt)
168
167
170
170
World Imports
Scenario
2,132
2,239
2,375
2,486
2,489
2,492
2,582
Change from Baseline
Change as percent
-10
-0.5%
9
0.4%
14
0.6%
4
0.2%
-7
-0.3%
-15
-0.6%
-20
-0.8%
Import re ductions from:
Japan
Mexico
1
12
-1
3
-1
-3
1
-3
2
-1
2
3
2
5
Others
T otal
-3
10
-11
-9
-10
-14
-1
-4
6
7
10
15
13
20
Added Export O pportunities
T aiwan
309
97%
258
104%
200
108%
172
102%
160
96%
155
91%
150
88%
United States
European Union (15)
309
-1
271
-2
212
-1
176
1
153
2
142
2
139
2
2
-7
-7
-0
5
8
8
100%
105%
106%
102%
95%
92%
92%
Loss in Exports by Taiwan
Canada
U.S. Share
2004
2005
2006
(dollars per mt)
US Barrows and Gilts Price
Scenario
Change from Baseline
Change as percent
2003
Trade Impacts of Foot and Mouth Disease in Taiwan/ 25
Table A.5. Scenario 2 world pork trade impacts
Year
2000
2001
2002
337
362
322
(tmt)
289
338
378
378
China
Eastern Europe
European Union
205
64
530
205
75
552
193
82
554
182
77
556
186
84
583
189
103
607
177
111
608
T aiwan
United States
28
969
105
939
169
1,056
181
1,200
182
1,117
187
1,028
187
1,121
2,132
2,239
2,375
2,484
2,489
2,492
2,582
546
200
1,013
525
202
1,106
561
209
1,152
603
217
1,167
583
218
1,183
563
219
1,200
568
228
1,222
Mexico
Other Western Europe
South Korea
176
18
73
206
20
78
239
22
93
256
24
112
252
26
116
259
28
121
284
30
147
Rest of World
106
101
98
106
111
103
102
2,132
2,239
2,375
2,484
2,489
2,492
2,582
994
1,064
1,004
(tmt)
946
1,038
1,120
1,035
2
-7
-7
(tmt)
-0
5
8
8
-0
-1
-1
2
-6
-2
4
-8
-1
2
-6
1
4
-4
2
5
-2
2
3
-1
2
-319
309
-249
271
-186
212
-168
176
-167
153
-170
142
-170
139
T otal Net Exports
-10
9
14
4
-7
-15
-20
Net Imports
Former Soviet Union
Hong Kong
11
0
16
1
(1,000 mt)
15
8
1
-0
4
-0
2
-1
2
-1
-1
-12
0
1
-3
0
1
3
0
-1
3
0
-2
1
0
-2
-3
0
-2
-5
0
-1
-8
0
-6
-0
-5
-1
-6
-3
-7
-3
-8
-7
-8
-10
9
14
4
-7
-15
-20
Net Exports
Canada
T otal Net Exports
T otal Net Imports
U.S. Barrow and Gilt Price
2004
2005
2006
(dollars per mt)
Net Imports
Former Soviet Union
Hong Kong
Japan
2003
Change from Baseline
Net Exports
Canada
China
Eastern Europe
European Union
T aiwan
United States
Japan
Mexico
Other Western Europe
South Korea
Rest of World
T otal Net Imports
26 / FAPRI Staff
Table A.6. Scenario 2 U.S. pork sector results
Year
2000
2001
2002
2003
2004
2005
2006
(Million Head)
Inventories
Market Hogs
51.0
52.2
52.4
52.6
54.0
55.5
56.1
Percent change
from Baseline
2.5%
2.0%
1.4%
1.0%
0.7%
0.6%
0.6%
Breeding Herd
7.06
6.99
7.07
7.04
6.86
6.87
6.86
Percent change
from Baseline
2.2%
1.6%
1.1%
0.7%
0.7%
0.7%
0.7%
(tmt)
Supply and De mand
Production
Percent change
9058
2.3%
9069
2.2%
9345
1.6%
9596
1.1%
9447
0.8%
9390
0.7%
9687
0.7%
8107
-1.3%
8135
-0.9%
8276
-0.7%
8393
-0.8%
8346
-0.9%
8360
-0.9%
8551
-0.9%
1207
34.5%
1178
29.9%
1294
19.6%
1438
13.9%
1355
12.7%
1266
12.7%
1359
11.4%
50.78
1.2%
46.94
1.2%
2.61
1.9%
2.60
1.8%
8.69
10.8%
4.63
22.2%
from Baseline
Domestic Use
Percent change
from Baseline
Exports
Percent change
from Baseline
(dollars per cwt)
Price s
Barrows and Gilts
Percent change
from Baseline
45.10
-0.7%
48.28
-1.5%
45.54
-1.2%
42.92
0.2%
47.08
1.0%
(dollars per lb)
Pork Retail
Percent change
2.36
2.6%
2.45
1.7%
2.44
1.4%
2.42
1.8%
2.54
1.9%
from Baseline
(dollars per cwt)
Net Re turns
Farrow - Finish
Percent change
from Baseline
7.00
-1.5%
9.19
-4.9%
5.84
-4.1%
2.95
12.8%
6.08
13.4%
Trade Impacts of Foot and Mouth Disease in Taiwan/ 27
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